Abbott government budget will hurt the poor

Economists have warned that the federal government’s budget will hit Australia’s poor much harder than the public realise, with obvious ‘'regressive;’ policy changes that will reduce the incomes of the poorest much more than those on higher incomes.

''In terms of the total fiscal package, it’s a very regressive [budget] overall,'' Ben Phillips from the National Centre for Social and Economic Modelling said.

''We look at households’ disposable income at the end of the day and we add on any of the goodies, and we take away all of the things taxpayers are either not getting or will have to pay in tax. And the overall impact [of this budget] will fall mostly on the poor.''

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A range of policy experts said that obvious regressive policies in the budget include the changes to Family Tax Benefits Part A and B, the $7 co-payments to visit the GP, the new co-payments for pathology tests and diagnostic imaging tests, and the increase in the pharmaceutical co-payment.

Professor Peter Whiteford from the Australian National University said the biggest regressive policy is the decision to change Family Tax Benefit Part B.

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''If you’re a lone parent with one child, you get $750 and you lose $2200, so you’ll lose about $1500 a year from that,'' Mr Whiteford said. ''When your income is already very low ... that’s fairly regressive.''

The federal government’s proposed $7 co-payment to visit a GP would also hurt the poor more than we realise, economists said.

Said the biggest regressive policy is to change Family Tax Benefit Part B: Professor Peter Whiteford. Photo: Supplied

But if those on $200,000 a year were asked to pay 3.5 per cent of their weekly income, like those on $200 a week, they would have to spend $134.60 to visit the doctor, not $7.

Stephen Duckett, the health program director for the Grattan Institute, said new co-payments for pathology tests and diagnostic imaging tests will act as a further deterrent for people on low incomes to visit the doctor.

''These are things that are actually ordered by doctors because they think they need them to make a diagnosis,'' Mr Duckett said. ''So we’re now no longer talking about co-payments to deter unnecessary services or for a price signal on patients. We’re now talking about a price signal when patients aren’t actually making the decision. So it’s a dramatically different proposition.''

The warnings come after economists said this week that the Abbott government’s first budget would increase inequality in Australia if it tried to reduce the deficit by predominantly cutting spending.

The budget papers this week said that 77 per cent of budget savings will be made by cutting government spending.